Agenda Item No: M.1
AGENDA REPORT
DATE: December 3, 2024
TO: Mayor and Council
FROM: David Gassaway, City Manager
SUBJECT: Resolution 2024-279
Making Findings Required Under Government Code Section 4217.10 to 4217.18; Authorizing the City Manager to Enter into an Energy Savings Performance Contract with Willdan Energy Solutions for Efficiency and Infrastructure Improvement Projects; Authorizing Staff to Negotiate a Financing Plan Not- to-Exceed $23,000,000; Updating the 5 -Year Capital Improvement Plan to Include the Energy Conservation Project – Phase 1; and Authorizing an Update to the Fiscal Year 2024-2025 Budget
Funding Source: $31,579,787 ($2,519,000, Bedroom Tax; $2,401,308, AB1600 Government Facilities; $2,140,000, Construction License; $1,318,000, Civic Center Improvements; $310,000 – Transit)
Contact: Marisa Cumpian, (707) 428-7494
RECOMMENDED ACTION
Hold public hearing and adopt resolution.
STATEMENT OF ISSUE
The City of Fairfield selected Willdan Energy Solutions (WES) through a competitive Request for Qualifications (RFQ) process to support the City with energy conservation design-build services. WES has completed the Investment Grade Audit (IGA), which includes an in-depth analysis of the financial aspects of energy savings and return on investment from changes or upgrades to City facilities that ar e in alignment with addressing core infrastructure needs, deferred maintenance, and efficiency improvements.
DISCUSSION
The scopes of work identified as the Energy Conservation Project – Phase 1 (Project) are a result of recommendations from the IGA. They prioritize measures that include time restricted incentives (i.e.
NEM 2.0 tariff for solar) and for equipment and upgrades based on systems in various states of failure and end of life.
The Project includes the replacement of aged and maintenance inte nsive heating, ventilation, and air conditioning (HVAC) systems at five facilities, the installation of solar photovoltaic (PV) systems at seven facilities, and the conversion of lighting to light -emitting diode (LED) systems at 25 facilities. It also includes modifications and modernization of the Central Utility Plant, which provides power to the City Hall Campus, and the retro commissioning, controls integration, and roofing replacements at City Hall and the Rancho Solano Golf Course. Additional upgrades include updated irrigation controls for parks, two new dehumidifier units at the Allan Witt Aquatics Complex, and domestic water heater upgrades.
Solar PV Locations:
Allan Witt Aquatics Complex
Allan Witt Sports Center
Art Koch Range & Training Facility
Cordelia Library
Corporation Yard
Fairfield Transportation Center
Fire Station 41
Funding
The total cost of the Project is $31,579,787, which includes $1,581,723 in a management reserves budget which may not be spent if the Project does not require it. If all measures are constructed, and we receive the anticipated $2.4 million of federal tax credits, there are anticipated lifetime (30 year) savings of $47.9 million, with net lifetime Project savings of $4.3 million to $17.9 million.
Staff has identified approximately $8.7 million in capital outlay within the fiscal year (FY) 2024 -2025 Budget and intends to seek financing to fund the remaining balance of $22,891,479. Staff anticipates exploring 0% on-bill financing and Tax-Exempt Lease Purchase (TELP) financing options and will present the financing plan and associated documents to the City C ouncil for approval at a future meeting.
However, to secure the Project and approve the Energy Savings Performance Contract, staff seeks authorization to negotiate a financing plan with an amount not to exceed $23,000,000. The annual impact to the general fund for the repayment on a financing plan could range from a net cost of $300,000 to $500,000 per year for the first 5 -8 years. An alternative financing plan could result in an annual cash flow positive to the general fund of $200,000 to $300,000 for the life of the loan but would add an additional estimated cost of $1,000,000 to $2,000,000.
Findings
As required by California Government Code Secti on 4217.10-4217.18, the council may by Resolution authorize the City to enter into an Energy Savings Performance Contract if the Council determines it is in the best interest of the City to do so, and the Council finds and adopts the required findings.
The findings shall provide the following:
That the anticipated cost of implementing the energy-related improvements will be less than the anticipated marginal cost of the thermal, electrical, or other energy the City would have consumed in the absenc e of purchasing the energy improvements. The findings would also indicate that the City selected WES to perform future phases of energy conservation projects associated with the IGA.
That the difference, if any, between the fair rental value for any real property subject to a facility ground lease and the agreed rent is anticipated to be offset by below -market energy purchases or other benefits provided under the energy service contract.
That funds for the repayment of the financing or the cost of design, construction, and operation of the energy conservation facility, or both, as required by the contract are projected to be available from revenues resulting from sales of electricity or thermal energy from the facility or from funding that otherwise would have been used for purchase of electrical, thermal, or other energy required by the public agency in the absence of the energy conservation facility, or both.
Recommendation
Staff recommends that the council proceed as follows:
Adopt Required Findings Under Government Code Section 4217.10 - 4217.18; and Authorize the City Manager to Execute the Energy Savings Performance Contract with WES; and Authorize Staff to Negotiate a Financing Plan with an Amount Not to Exceed $23,000,000; and Update the 5-Year Capital Improvement Plan to Include the Energy Conservation Project – Phase 1; and
Authorize an Update to the Fiscal Year 2024-2025 Budget.
FINANCIAL IMPACT
The Project was not included in the FY 2024 -2025 Capital Budget. This requires a budget adjustment to transfer $8,688,308 from $2,519,000 – Bedroom Tax (Fund 165); $2,401,308 – AB1600 Government Facilities (Fund 262); $2,140,000 – Construction License (Fund 164); $1,318,000 – Civic Center Improvements (Fund 532); $310,000 – Transit (Fund 451 and 452) to the Public Buildings Capital Fund (Fund 254). This will result in an increase in appropriations to the Project (CPW010107).
Staff has confirmed that adequate funding exists in Funds 164, 165, 262, 451, 452, 532; however, this will reduce the amount available in future years for transfers to the General Fund.
PUBLIC CONTACT/ADVISORY BODY RECOMMENDATION
The council authorized the city manager to issue a notice to proceed to WES to perform an IGA at the May 16, 2023, meeting and receiv ed status updates on the progress at public meetings on September 19, 2023, and June 18, 2024.
The Public Hearing Notification for tonight’s meeting was published in the Daily Republic on Sunday, November 17, 2024, and again on November 24, 2024.
ALTERNATIVE ACTION
Staff is seeking council direction.
COORDINATED WITH
City Attorney’s Office, City Manager’s Office, and Finance
STAFF CONTACT
Marisa Cumpian, Sr. Management Analyst
(707) 428-7494
[email protected]
ATTACHMENTS
Attachment 2: Proposed Resolution
Attachment 3: Proposed Agreement